Pakistan received a green signal to move ahead with the construction of the Pakistan-Iran Pipeline from the Iranian border to Gwadar, Pak’s city port using government-sanctioned funds, as announced on Friday from the Energy Cabinet Commission.
Pak approved the first phase of the gas pipeline project work on the 80-kilometer (49-mile) phase within its borders to avoid a $20 billion penalty.
The project is carried out by the private company Inter State Gas Systems, which is expected to cost around $158Million and will be funded by the Gas Infrastructure Development Cess(GIDC)
Pak-Iran’s long-held Pipeline
The Iran–Pakistan gas pipeline popularly Peace Pipeline or IP Gas is an under-construction 2,775-kilometre (1,724 mi) pipeline to deliver natural gas from Iran to Pakistan
The Peace Pipeline construction discussion started way back in 1995. This agreement anticipated construction from the South Pars gas field to Karachi, Pakistan.
Pakistan says it needs sufficient gas supplies to keep its industry going as its domestic resources are depleting at an alarming rate. With an estimate of only 12 years of natural gas left at the current consumption level of the country, the share of imported liquefied natural gas has risen to 29% of total supply.
The project began in 2013 when both countries signed a 25-year IP Gas deal. The construction was on hold for several years by Pakistan as investors were reluctant to back up the project due to UN sanctions against Tehran.
A senior Pakistan Petroleum Ministry official told a Senate Committee in September 2023 about Islamabad’s negotiations with Tehran to avoid the gigantic liability of $20 Billion as the long-stalled project’s deadline is not far as 2024 approaches.
Last year, Islamabad also approached Washington pleading to find a solution to the hanging project but received no luck.
Initially, this project was known as the India-Pakistan-Iran gas pipeline project, but later it became a bilateral operation between Pakistan and Iran as India withdrew from it.
Will the project get successful now?
The fate of this shuffled pipeline project has constantly faced uncertainty with Pakistan where they repeatedly run into problems be it due to their financial shortcomings or due to pressure from the U.S.The project was left hanging after Tehran refused the $2 Billion financial support to Pak. Last year, the country’s Public Accounts Committee was informed that Pak would be facing a heavy penalty of 18 billion if it did not begin with the IP gas pipeline project.
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